Background and Charge

Executive Sponsors:

EVPMA Cabinet

UMHS Leads:

Deborah Childs, Chief HR Officer- Health System

Jim Bell, Chief Administrative Officer – Medical School

The Background:

The University of Michigan has a long history of providing competitive paid time off programs for eligible staff. A competitive position has generally been described as being ±5% from the market average, constituting a range of 95-105 with market average being 100.

Medical School(UMMS) paid time off is comprised of:

Holidays

Season Days

Vacation days*

Short-term sick days

Extended Sick Time

This plan is offered to UMMS staff and is the same as the plan offered to University staff.

*The accrual rates for vacation days for Medical School staff differs from the accrual rates of the HHC staff’s PTO plan. The HHC PTO accrual is used to cover short-term sick absences.

Currently, all staff within UMHS are provided with seven holidays and an identical Extended Sick Time benefit. The benefit provides for six months at 100% of pay and six months at 50% of pay, for a total of 12 months of paid sick time, after two years of service; renewable every five years. These benefits are equal to those offered to University staff.

UMMS paid time off benefit is above market with a Market Index of 108. This places UMMS between the 4th and 5th highest position when compared to 23 Academic Peer Institutions. Additionally, this benefit comprises 39% of the overall value of All UMMS benefits.

The UMHHC paid time off benefit is also above market, with a Market Index of 118. This places UMHHC between the 1st and 2nd highest position compared to six (6) local Health System peers and above the top position compared to the 11 national/regional peers. This benefit comprises 41% of the overall value of all UMHHC benefits.

It is part of the University’s continuing effort to more effectively balance responsible financial stewardship with safeguarding our ability to attract and retain premier staff, protect the overall competitiveness and long-term viability of U-M’s benefit programs, and direct resources toward the UMHS core mission of education, research and patient care. Given the highly competitive position we enjoy with these benefits, an opportunity exists to review our paid time off benefit programs.

The Charge:

The Committee on Paid Time Off Programs is charged with reviewing and making recommendations on options to reduce the UMHS cost to provide the current paid time off programs to UMMS staff and HHC staff. The plans under review include vacation, short-term sick, season days, PTO and short term disability (extended sick plan).

A market analysis conducted by Hewitt identified a variety of benefit approaches that would ensure the Health System’s overall benefit package remains at or above market for higher education and health care. These approaches resulted in significant recurring cost savings to UMHS in both the short and long term. The Committee will consider a combination of existing staff and new hire accruals, sell back feature, maximum allowable roll-over accruals, and extended sick time eligibility and percentage of replacement pay provided to achieve a plan that results in a position at or above market (.95 to 1.05) and recurring savings to UMHS in the range of:

Not less than $15 million (cumulative) by 2018.

Principles and considerations that guide the Committee’s recommendations include the following:

Align Paid Time Off changes so that the overall market competitiveness of UMHS benefit programs is retained at or slightly above market.

Consider the financial impact of implementing a range of options from current staff to “new” staff.

Monitor and consider any legislative or other changes with broad impact on paid time off benefits that are likely to affect our projections.

Consider changes that will include gradations of individual impact with the greatest affect on new hires, followed by current staff.

Address the ability of current staff to plan for and manage changes in benefit plan design

Address the implications of the proposed recommendations on staff and impacts to broader University Community.

The Committee may decide to take into consideration differences in their recommendations for current staff compared to “New” hires.

The Objective:

The Committee on Paid Time Off Programs is asked to provide advice, guidance and recommendations that will better align UMHS Paid Time Off benefits with the market concerning:

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